Gold prices rise as Italy uncertainty boosts safe-haven demand

Gold prices edged up on Wednesday after gaining over 1 percent in the previous session, buoyed by safe-haven demand as Italy's budget plan sets it on course for a potential clash with the European Union.

Spot gold had risen 0.3 percent to $1,206.09 by 0126 GMT, hovering near a more than one-week high of $1208.23 touched in the previous session.

Risk appetite was hit after EU officials expressed concerns about Italy's budget plan, which would widen the deficit significantly. The deficit blowout revived fears of the eurozone debt crisis and put pressure on the euro.

Italy's government has no intention of leaving the euro, Claudio Borghi, the economics spokesman of the right-wing League, said on Tuesday, clarifying earlier remarks which had roiled financial markets.

Italy is totally committed to the euro and any critical comments about the single currency are individual opinions which have nothing to do with the government's policies, Prime Minister Giuseppe Conte said on Tuesday.

China's hopes of negotiating a free trade pact with Canada or Mexico were dealt a sharp setback by a provision deep in the new U.S.-Mexico-Canada trade agreement that aims to forbid such deals with "non-market" countries, trade experts said on Tuesday.

U.S. Federal Reserve Chairman Jerome Powell on Tuesday hailed a "remarkably positive outlook" for the U.S. economy that he feels is on the verge of a "historically rare" era of ultra-low unemployment and tame prices for the foreseeable future.

The array of trade tariffs and counter measures from other countries could raise U.S. inflation but there is so far no indication of that happening, Powell said.